What did they get for them at first? I think they got $15 apiece for them, and today you can buy them for 39 cents, because everybody knew that $15 was too much for a ball point pen, and so somebody came in and cut it in half, and then down to $5, and then down to $1.98, and 69 cents.

The CHAIRMAN. Yes.

Mr. STEINKRAUS. Why? Because there was such a large margin of profit there that a lot of folks said, "I can make that for less than that, and still make a good profit on that."

That is the way those large margins of profit are cut down, provided there is freedom of entry. And if you find cases where there is no freedom of entry, then you may also find companies with enormous margins of profit, which they do not have to worry about. They do not even have to operate all their capacities; they can have half the plants shut down and just soak the public, because the public has nowhere else to go.

The CHAIRMAN. In other words, you would make a distinction, would you not, between efficiency in profit-making and efficiency in production, because the latter is what helps the public?

Mr. STEINKRAUS. That is right; the public interest must come first in everything which we do in this respect.

The CHAIRMAN. Now, is it within your knowledge to state that recent figures indicate the earnings of the large concerns are increasing while those of the smaller concerns are decreasing?

Mr. STEINKRAUS. Well, Mr. Chairman, on the matter of profits, I think that the whole situation we are in today is still one of readjustment from the war.

The war was a most upsetting thing for industry, in general, and for the public, and it seems to me that it takes a number of years for us to shake down as a nation to a peacetime situation.

My own industry has had two very vigorous shakedowns, one in 1947, and one in the first 6 months of this year, when we lost an awful lot of money in the readjustment. But we now feel we are pretty well readjusted.

Some other industries have gone through their readjustment. Some of them have it still to come.

As those industries shake down to something more like a peacetime situation, I think we are going to have a much more normal curve of business and of profits.

Those who had a greater demand than the supply had long profits. But I venture to say that the automobile industry is in the first steps of smaller profits. The demand was much greater than the supply. As soon as that supply catches up your price structure will go down. That has happened in every industry.

The only thing is that we are an impatient people in America. We have a war, and we go all out, and we win the war, and then we expect the next day I remember how I felt myself the day after the armistice in the First World War. We all wanted to come home after the first day.

It takes time for the after effect of a war to straighten out.

We have not gone through that whole period yet; I think we have gone through most of it, but I think different industries are still in it. Some of them have got large margins of profit because of the supply and demand situation, and some of them have pretty meager profits today.

I certainly know in my own industry our stockholders are complaining because they are not getting dividends, and the profits are not there that we would like to see. So you will find them all over the lot. The CHAIRMAN. Would you say that rayon and nylon are substitutes for each other in some cases?

Mr. STEINKRAUS. I think so. Are they not?

The CHAIRMAN. Well, of course you know that one company, du Pont, is a very large manufacturer

Mr. STEINKRAUS. I think they are a substitute for wool and cotton. Mr. KEATING. You can refuse to answer on the ground that it might incriminate you.

[Laughter.]

The CHAIRMAN. There we have two products made by the du Pont Co.

Mr. STEINKRAUS. Yes.

The CHAIRMAN. And du Pont is a very large factor in the manufacture of rayon, which is one of the substitutes that you speak of. Mr. STEINKRAUS. Substitute for what?

The CHAIRMAN. Nylon.

Mr. STEINKRAUS. Not for each other.

The CHAIRMAN. I asked you that before.

Mr. STEINKRAUS. No; I think they are substitutes for cotton and for wool and linen.

The CHAIRMAN. Not for each other?

Mr. STEINKRAUS. Well, I think one was an improvement on the other, but I do not think the fact that if they come out with a third product and call it some other kind of "on" that you should say that they are competing mainly with each other.

The thing they have done is come into the field and competed with the old standard things like cotton cloth and woolen cloth and all the other silks.

The CHAIRMAN. They also came in with rayon.

Mr. STEINKRAUS. Let them compete with each other. That is all right, as long as they keep improving. Ask any woman, and she will tell you she is glad nylon is competing with rayon.

The CHAIRMAN. Apparently, they are making vast quantities of rayon. Nylon has not put the rayon product in the cold at all.

Mr. STEINKRAUS. I do not see what it proves, Mr. Chairman. It seems to me that we are getting a whole series of new products coming in that are giving vigorous competition to silk and cotton and wool, and they are improving. It is a new industry.

Of course, if nylon is better than rayon, if they come out with something better, and it is like the refrigeration business. That came in, but the ice business stayed on.

The CHAIRMAN. Rayon is a substitute for nylon in making ladies' dresses. There you have one concern

Mr. STEINKRAUS. They are the same family, Mr. Chairman.

The CHAIRMAN. In one of your statements you said that competition results, in part, from the finding of substitutes which displace the

Mr. STEINKRAUS. They do not make dresses, though. They make this product.

The CHAIRMAN. Who do not make dresses?

Mr. STEINKRAUS. Du Pont.

The CHAIRMAN. I do not say they do.

Mr. STEINKRAUS. Lots of folks make that raw material, and then compete all over the lot with what is made out of it.

The CHAIRMAN. But it is a fabric out of which dresses are made. Mr. BRYSON. And they sold the fabric for less than $2, and the dress brought $49.

Mr. STEINKRAUS. Furthermore, I think it is wonderful for them to have found those new products for us.

The CHAIRMAN. In your statement, Mr. Steinkraus, you speak of bronze bearings, babbit bearings. Do you make them?

Mr. STEINKRAUS. No, sir.

The CHAIRMAN. Are there any substitutes for the products that you are in?

Mr. STEINKRAUS. Oh, we get vigorous competition from aluminum and stainless steel, magnesium, some of these new plastics. We have had quite a study made as to what field we would lose out on. We used to make all the knobs of automobiles out of brass; now they are practically all plastic.

Mr. BRYSON. You make brass bearings?

Mr. STEINKRAUS. No; we do not. We use a lot of bearings, and we know that this laminated-plastic bearing is making quite an impression. The CHAIRMAN. If you break this list of substitutes or replacement items down, how many of those are made by du Pont? I notice in going down the line that there are quite a number of them made by du Pont.

Mr. STEINKRAUS. Yes; I recognize that, Mr. Chairman. There was no favoritism attempted to be shown. I simply took most of those that were just popularly known.

The CHAIRMAN. I was just curious to know how many of those were made by du Pont.

Mr. ŠTEINKRAUS. These happen to be more in the public eye right now than some of the other synthetic products, but there are an awful lot of them not made by du Pont.

The CHAIRMAN. Could you tell us in a subsequent writing and give us how many of those replacements items would be made by du Pont, if you could find out?

Mr. STEINKRAUSS. We will be very glad to.

Mr. BERNHARDT. There is a further question on that schedule in your appendix B, Mr. Steinkraus. Is it possible for you to tell us whether or not the manufacturer of the substitute product is the same as the manufacturer of the older item?

Mr. STEINKRAUS. Oh, yes. I do not think that is true in a single

case.

The following information was subsequently supplied by Mr. Steinkraus :)

APPENDIX B

In evidence of the technological changes and substitute materials becoming available, the following items, selected from thousands which might be mentioned are worth noting:

5. Bronze bearings, babbitt bearings. Laminated plastic bearings for indus

trial equipment, e. g., roll neck bear-
ings in steel mills.
Now molded of phenolic plastics where
National Electric Code-1947-re-
quires use of insulated bushings.

Molded of phenolic and given a dead-
white vinyl resin coating to produce
a lower cost, but superior product.
Densified wood parting boards and pat-
terns are considerably lower in cost,
produced in a fraction of the time, and
much longer-lived.

Comment

Du Pont is the only manufacturer of "Teflon" tetrafluoroethylene resin, but other products com-
titive with "Teflon" in the field suggested by column (1) are made by Dow-Corning Co., Gen-
eral Electric Co., M. W. Kellogg Co.

Du Pont does not make "Terratex" synthetic inorganic paper.

Synthetic phenolic resin varnishes are made by most concerns engaged in the paint, varnish, and
lacquer industry, including du Pont.

Du Pont and the Bakelite Corp., a unit of Union Carbide & Carbon Chemical Co., are the only
manufacturers of polythene (or polyethylene). Manufacturers of competitive plastics used for
container closures are as follows: American Cyanamid Co.; American Molding Powder & Chem-
ical Corp.; Bakelite Corp.; Catalin Corp. of America; Dow Chemical Co.; Durez Plastics &
Chemicals, Inc.; Durite Products (Borden Co.); General Electric Co.; Heresite & Chemical
Co.; Koppers Co.; Monsanto Chemical Co.; National Plastics, Inc.; Omni Products Corp.;
Plaskon division (Libbey-Owens-Ford Glass Co.); Rohm & Haas Co.; Sylvan Plastics, Inc.;
Watertown Manufacturing Co.
Du Pont does not make laminated plastics for use in silent gears, such as automotive timing gears
and for bearings in steel mills, but it does make molded plastics for use in gears and bearings for
industrial equipment. Other manufacturers of molded and laminated plastics for such applica-
tions include: Bakelite Corp.; Consolidated Water Power & Paper Co.; Continental-Diamond
Fibre Co.; Durez Plastics & Chemicals, Inc.; Durite Products (Borden Co.); Formica Co.; General
Electric Co.; Heresite & Chemical Co.; Monsanto Chemical Co.; National Plastics, Inc.; National
Vulcanized Fibre Co.; Spaulding Fibre Co., Inc.; Synthane Corp.; Taylor Fibre Co.; Watertown
Manufacturing Co.; Westinghouse Electric Corp.
Same as above (No. 4).

Du Pont does not make molded phenolic plastics for use as insulator bushings, but it does make
molded nylon, polythene, and "Teflon" tetrafluoroethylene resin plastics for this application.
Other manufacturers of molded plastics for use as insulator bushings include: American Molding
Powder & Chemical Corp; Bakelite Corp.; Catalin Corp. of America; Dow Chemical Co.; Durez
Plastics & Chemicals, Inc.; Durite Products (Borden Co.); General Electric Co.; Heresite &
Chemical Co.; Koppers Co.; Monsanto Chemical Co.; National Plastics, Inc.; Omni Products
Corp.; Rohm & Haas Co.; Watertown Manufacturing Co.

Du Pont not in this field.

Do.

9. Metal (steel or aluminum) truck | Paper-based laminates more than serve

and trailer floors and walls, airplane flooring.

Vinylite flooring in place of linseed oil..
New plastic-base for severe service.
Vinylite in place of shellac..
Vinylite in place of rubber.

Aluminum panels and prefab reinforced concrete slabs.

Du Pont and the Bakelite Corp. are the only manufacturers of polythene (or polyethylene), but
manufacturers of other plastics now widely used in toys and playthings include: American Cyan-
amid Co.; Americgn Insulator Corp.; American Molding Powder & Chemical Corp.; American
Plastics Corp.; Bakelite Corp.; Catalin Corp. of America; Celanese Corp. of America; Dow Chem-
ical Co.; Garfield Manufacturing Co.; General Electric Co.; George Morrell; Heresite & Chemical
Co.; Koppers Co.; Marblette Corp.; Monsanto Chemical Co.; Myler Plastics Co.; National
Plastics, Inc.; Nixon Nitration Works; Omni Products Corp.; Plaskon division (Libbey-Owens-
Ford Glass Co.); Rohm & Haas Co.; Sylvan Plastics Inc.; Tennessee Eastman Corp.; Watertown
Manufacturing Co.
Du Pont does not make Vinylite. Du Pont and the Bakelite Corp. are the only manufacturers of
polythene (or polyethylene) plastic, but manufacturers of other products (enamels, resins, and
synthetic rubber) used for insulating wire include: Enamels-General Electric Co., P. D. George
Co., Schenectady Varnish. Synthetic rubber-En-Jay Co. (Standard Oil, New Jersey), Glenn
L. Martin Co., Goodrich Chemical Co., Office of Rubber Reserve (U. S. Government). Resins-
American Phenolic, Bakelite Corp., B. F. Goodrich Co., Dow-Corning, Federal Telephone &
Radio, General Electric Co., Glenn L. Martin Co., Monsanto Chemical Co., M. W. Kellogg
Co. In addition, there are a number of concerns making natural rubber wire insulation. which is
competitive with the above materials.
Du Pont does not make vinyl film for the applications suggested in column (1), but the company
is now producing polyethylene film which is competitive with vinyl film for a number of non-
packaging applications, including raincoats and shower curtains. (Polyethylene is the generic
name for this plastic. Du Pont's name for its product is polythene.) In addition to the poly-
theme film made by Du Pont, the company sells polythene resins to the following companies,
who likewise make and sell film from the polythene they buy from Du Pont: Harwid Co.; Plax
Corp.; Visking Corp.; Durethene Co.; Chester Package Products Co., AMG Products Co.;
Carter Products Corp.; Extruders, Inc.; Irvington Varnish & Insulator Co.; Plastics Process
Co.; Shoreline Industries; Surprenant Manufacturing Co. Also, since polyethylene is made by
Bakelite Corp. as well as by Du Pont, competitive polyethylene film is also on the market.
Vinyl film, which is used for the applications suggested in column (1), is made by the following
concerns: Bakelite, Goodyear, Goodrich.

The following companies make other kinds of unsupported film which are competitive with poly-
ethylene and vinyl film in the applications suggested in column (1): Dewey & Almy, Dow, Fire-
Du Pont not in this field.

1 In the column headed "Substitute or replacement item," products in italics are manufactured by du Pont.